Richard Koch — Revisiting the 80/20 Principle, The Power of Optimistic Journaling, Studying History to Improve Investing, and The Grand Beliefs of Winners (Plus: The Toxic Beliefs of Losers) (#680)

“M. Scott Peck wrote a book which starts, ‘Life is difficult.’ This is one of the great things about life. If you understand this, you can transcend it, because you anticipate that things are going to be difficult, and you can take pride in overcoming difficulties. But if you expect there are going to be no difficulties, obviously you are going to be disillusioned.”

— Richard Koch

Richard Koch (@RichardKoch8020) is an entrepreneur, investor, former strategy consultant, and author of several books on business and ideas, including four on how to apply the 80/20 principle in all walks of life.

His investments have grown at 22 percent compounded annually over 37 years and have included Filofax, Plymouth Gin, Belgo, Betfair, FanDuel, and Auto1. He has worked for Boston Consulting Group and was a partner at Bain & Co. before joining Jim Lawrence and Iain Evans to start LEK, which expanded from three to 350 professionals during the six years Richard was there.

In 1997, Richard’s book The 80/20 Principle reinterpreted the Pareto Rule—which states that most results come from a small minority of causes—and extended it beyond its well-known application in business into personal life, happiness, and success. The book, rewritten in 2022, has sold more than a million copies, been translated into roughly 40 languages, and has become a business classic. It was named by GQ as one of the top 25 business books of all time. Richard’s latest book is Unreasonable Success and How to Achieve It. 

He has two upcoming books: 80/20 Beliefs, which identifies the very few beliefs in our lives that strongly influence what we do, and, therefore, the results we get, and 80/20 Daily, a collection of 365 short daily readings using the 80/20 philosophy to achieve the good life.

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Want to hear the last time Richard Koch was on the show? Listen here to our conversation in which we discussed investing for the mathematically challenged, Oxford Bodleian Library secrets, writing The 80/20 Principle, optimizing happiness, different journaling styles, nine landmarks of successful people, Nelson Mandela’s unique intuition, and much more.

What was your favorite quote or lesson from this episode? Please let me know in the comments.

SCROLL BELOW FOR LINKS AND SHOW NOTES…

SELECTED LINKS FROM THE EPISODE

• Connect with Richard Koch:

Website | Twitter

• THE OXFORD EXPERIENCE at WADHAM COLLEGE, OXFORD | Contact form
• Richard Koch on Mastering the 80/20 Principle, Achieving Unreasonable Success, and the Art of Gambling | The Tim Ferriss Show #466
• Unreasonable Success and How to Achieve It: Unlocking the 9 Secrets of People Who Changed the World by Richard Koch | Amazon
• The 80/20 Principle: The Secret to Achieving More with Less by Richard Koch | Amazon
• The Simplest Way to Talk about Location | What3Words
• Glastonbury Festival of Contemporary Performing Arts
• Fear-Setting: The Most Valuable Exercise I Do Every Month | Tim Ferriss
• How to Increase Your Luck Surface Area | Codus Operandi
• Tranche: Definition in Finance, Purposes, and Examples | Investopedia
• Betfair | Wikipedia
• Bookmaker | Wikipedia
• What Is Vig and Overround? | Matter of Stats
• Filofax Company Turnaround Strategy (Richard Koch) | Planet Perry
• Belgo | Wikipedia
• Is Plymouth Gin the Unluckiest Spirits Brand Ever? | Just Drinks
• Mackerel | The Art of Tasting Portugal
• Counterfactuals | Stanford Encyclopedia of Philosophy
• Counterfactual History and the Outbreak of World War I | American Historical Association
• “No Lenin, No Hitler?” Reflections on Simon Sebag Montefiore’s Bolshevik Revolution Counterfactual | The Counterfactual History Review
• Expected Value Definition, Formula, and Examples | Investopedia
• Global Management Consulting Firm | Bain & Company
• Strategic Management Consulting | Boston Consulting Group
• What Is the Growth Share Matrix? | Boston Consulting Group
• Does Marriage Actually Make People Happier? | Psychology Today
• Harvard Professor: Winning the Lottery Won’t Make You Happier in Life | CNBC
• Living Longer: Historical and Projected Life Expectancy in the United States, 1960 to 2060 | US Census Bureau
• A Research-Based Approach to Relationships | The Gottman Institute
• Where Will You Be Happiest? | Richard Koch
• Cape Town Tourism
• Doris Day: Que Sera, Sera | YouTube
• The Pros and Cons of Moving to Portugal as an Expat | Portugal
• The Road Less Traveled: A New Psychology of Love, Traditional Values, and Spiritual Growth by M. Scott Peck | Amazon
• Tom Magliozzi: Happiness is Reality Minus Expectations | The Knoxville News Sentinel
• Meditations by Marcus Aurelius | Amazon
• Church or Cult? Inside the Moonies’ ‘World of Delusion’ | Financial Times
• Strategy Consulting Firm | L.E.K. Consulting
• Mental Toughness Training for Sports: Achieving Athletic Excellence by James E. Loehr | Amazon
• Rumble in (British) English Slang | Able2Know
• Basic Buddhism: The Theory of Karma | BuddhaNet
• The Lost Religion of Love and Optimism | Richard Koch
• The Log Song | The Ren & Stimpy Show
• England World Cup 1966 Stamp | Exploring Stamps
• Experts Forecast Cancer Research and Treatment Advances | American Association for Cancer Research
• English Patriotic Song: The Spanish Armada | English Folk Project
• Churchill: Walking with Destiny by Andrew Roberts | Amazon
• “I Shall Be the One to Save London” | The Churchill Project
• FanDuel | Wikipedia
• Europe’s Largest Wholesale Platform for Used Cars | AUTO1
• The Oxford Experience | Oxford University Department for Continuing Education
• Wadham College, University of Oxford
• The Oxford Tutorial | Oxford Study Abroad Programme
• THE OXFORD EXPERIENCE at WADHAM COLLEGE, OXFORD Contact form
• Flexible Work Options | L.E.K. Consulting
• Step Brothers | Prime Video
• Gather with Purpose: How to Host a Jeffersonian Dinner | Purpose Generation
• Dialog
• Understanding Comics: The Invisible Art by Scott McCloud (Note: Tim considers the first three chapters a bit slow, so he suggests skipping around.)
• Pablo Picasso in Eight Periods | DailyArt Magazine
• Colin Smith | Tate Britain
• What Steve Jobs Learned from the Bauhaus | Artsy
• Why Steve Jobs’s Passion for Calligraphy Is an Important Example for You | Entrepreneur
• Dan Carlin’s Hardcore History Podcast
• The Daily Stoic: 366 Meditations on Wisdom, Perseverance, and the Art of Living by Ryan Holiday and Stephen Hanselman | Amazon

SHOW NOTES

• [06:18] What3Words.
• [12:59] Upbeat fish pond reflections.
• [15:04] Journaling toward optimistic investment.
• [17:14] Betfair vs. bookmakers.
• [27:42] How history ties in with investment strategy.
• [33:47] Assigning probabilities.
• [36:56] The cows, the stars, and the question marks.
• [45:41] 80/20 happiness.
• [57:36] A qué será, será quandary.
• [1:06:48] Toxic beliefs and terrible templates.
• [1:11:24] A meeting with Bill Bain.
• [1:14:41] Charm school.
• [1:15:08] Why Bain & Company was a better fit than BCG had been.
• [1:17:34] The formula.
• [1:25:04] Identifying one’s own toxic beliefs.
• [1:35:04] Opposites to toxic beliefs.
• [1:41:53] Churchill’s helpful delusion.
• [1:47:46] The formation of grand beliefs.
• [1:51:06] How grand beliefs can become toxic.
• [1:53:37] Pattern interruption.
• [1:56:08] The Oxford Experience for 99/1 people.
• [2:09:04] A bespoke request for hands-on art.
• [2:11:33] Useful beauty.
• [2:18:55] Parting thoughts.

MORE RICHARD KOCH QUOTES FROM THE INTERVIEW

“The 80/20 principle runs … through the whole of my thinking. So, in terms of my own success or money but also things like happiness, I’m trying to think, ‘What are the few things that I need to do in order to attain what I want?’”
— Richard Koch

“I go around asking people, ‘Who are your best five friends in the world?’ And people come up with a list. And then I say, ‘Who are the five people that you spend the most time with?’ And very often, the lists are completely different. And that tells you that that person, they might be happy, but they’re certainly going against the grain.”
— Richard Koch

“M. Scott Peck wrote a book which starts, ‘Life is difficult.’ This is one of the great things about life. If you understand this, you can transcend it, because you anticipate that things are going to be difficult and you can take pride in overcoming difficulties. But if you expect there are going to be no difficulties, obviously you are going to be disillusioned.”
— Richard Koch

“Delusions can be very helpful sometimes.”
— Richard Koch

“Happiness is probably the least selfish thing that you can pursue, because if you’re happy, you’re going to make a lot of other people happy as well. If you’re miserable, you’re going to make other people miserable.”
— Richard Koch

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